1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 1 This disposition is not appropriate for publication. Although it may be cited for whatever persuasive value it may have (see Fed. R. App. P. 32.1), it has no precedential value. See 9th Cir. BAP Rule 8013-1. -1- UNITED STATES BANKRUPTCY APPELLATE PANEL OF THE NINTH CIRCUIT In re: ) BAP Nos. CC-12-1059-PaMkTa ) CC-12-1229-PaMkTa B SQUARED, INC., ) CC-12-1410 PaMkTa ) (related appeals) Debtor. ) ___________________________________) Bankr. No. 09-12590-GM ) DANNY WAYNE PRYOR, ) Adv. No. 11-01677-GM ) Appellant, ) ) v. ) M E M O R A N D U M 1 ) B SQUARED, INC., ) ) Appellee. ) ___________________________________) Argued and Submitted on May 16, 2013 at Pasadena, California Filed - May 31, 2013 Appeal from the United States Bankruptcy Court for the Central District of California Honorable Geraldine Mund, Bankruptcy Judge, Presiding Appearances: Appellant Danny Wayne Pryor argued pro se; Susan K. Seflin of Wolf, Rifkin, Shapiro, Schulman & Rabkin, LLP argued for appellee B Squared, Inc. Before: PAPPAS, MARKELL and TAYLOR, Bankruptcy Judges. FILED MAY 31 2013 SUSAN M SPRAUL, CLERK U.S. BKCY. APP. PANEL OF THE NINTH CIRCUIT
Transcript
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1 This disposition is not appropriate for publication. Although it may be cited for whatever persuasive value it may have(see Fed. R. App. P. 32.1), it has no precedential value. See 9thCir. BAP Rule 8013-1.
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UNITED STATES BANKRUPTCY APPELLATE PANEL
OF THE NINTH CIRCUIT
In re: ) BAP Nos. CC-12-1059-PaMkTa) CC-12-1229-PaMkTa
B SQUARED, INC., ) CC-12-1410 PaMkTa) (related appeals)
Appearances: Appellant Danny Wayne Pryor argued pro se; Susan K.Seflin of Wolf, Rifkin, Shapiro, Schulman & Rabkin,LLP argued for appellee B Squared, Inc.
Before: PAPPAS, MARKELL and TAYLOR, Bankruptcy Judges.
FILEDMAY 31 2013
SUSAN M SPRAUL, CLERKU.S. BKCY. APP. PANELOF THE NINTH CIRCUIT
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2 The record in this appeal involves numerous courts. Werefer to the court that entered the orders in this appeal as thebankruptcy court or the court. The court hearing Pryor’schapter 7 bankruptcy case is the “Pryor Bankruptcy Court.” It isusually clear in context which state court (Los Angeles Central,Lancaster or Long Beach Division) is discussed, so they are allreferred to as the state court.
3 Unless otherwise indicated, all chapter, section and rulereferences are to the Bankruptcy Code, 11 U.S.C. §§ 101-1532, andto the Federal Rules of Bankruptcy Procedure, Rules 1001-9037. TheFederal Rules of Civil Procedure are referred to as "Civil Rules."
4 Reference to B Squared also includes any references to itsd.b.a., All California Funding.
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An alleged creditor, Danny Wayne Pryor ("Pryor"), appeals
three orders of the bankruptcy court2: (1) an order finding that
Pryor was in contempt (the “Contempt Order”) for violating the
automatic stay and discharge injunction in the chapter 113 case of
the reorganized debtor, B Squared, Inc. (“B Squared”) (BAP No.
CC-12-1059); (2) an order denying reconsideration of an order
dismissing Pryor’s adversary proceeding seeking revocation of
B Squared’s plan confirmation (the “Dismissal Order”) (BAP No.
CC-12-1229); and (3) an order denying reconsideration of an order
designating Pryor as a vexatious litigant (the “Vexatious Litigant
Order”) (BAP No. CC-12-1410). We AFFIRM all three orders.
FACTS
Pryor is a former real estate contractor and developer in the
Los Angeles area. B Squared was a licensed mortgage broker in the
state of California.
The dispute between Pryor and B Squared4 began in 2003-2004.
Pryor purchased two parcels of land, one containing fourteen lots
and the other four lots, from the City of Lancaster, California
(the “Property”). Intending to develop the Property, in November
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5 Over the years, Pryor has prosecuted actions and claimsagainst B Squared under the names of Danny Wayne Pryor, Dan Pryor,Dan W. Pryor, Danny Pryor, Danny W. Pryor and Daniel Pryor. Hehas also acted through his controlled businesses, American RealEstate Securities, Inc. d.b.a. A.C.R.E.S., Inc., Acres Inc.,ACRES, ACRES Development, Inc., ACP Development, LLC, TurnkeyDevelopers, and ROYRP Enterprises, LP. Although he debates thepercentage of his ownership interest in these entities, Pryor hasnot challenged in this appeal that he controls these entities.Thus, unless there is need to separately identify a particularentity, any reference to Pryor means Pryor or Pryor acting throughhis controlled entities.
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2003, Pryor entered into a construction loan agreement with
B Squared for $3,500,000, secured by a deed of trust on fourteen
lots of the Property (“Construction Loan 1"). In March 2004,
Pryor entered into a second construction loan agreement with
B Squared for $900,000, secured by a deed of trust on the
remaining four lots (“Construction Loan 2").
On July 7, 2005, B Squared caused a Notice of Default to be
recorded concerning Construction Loan 1, based on Pryor’s alleged
failure to pay $130,294.75 in interest. A foreclosure sale was
held on January 13, 2006, at which B Squared acquired title to the
fourteen lots by credit bid. On June 21, 2005, B Squared recorded
a Notice of Default concerning Construction Loan 2, based on
Pryor’s alleged default on his obligation to pay $948,414.54.
B Squared acquired title to the four lots at a foreclosure sale on
November 18, 2005.
The Central Division Action
On June 6, 2006, Pryor5 filed an action in Los Angeles
Superior Court, Central Division, American Commodities Real Estate
Sec. v. B Squared, Inc., case no. BC353526 (the “Central Division
Action”). In the complaint, Pryor asserted causes of action for
quiet title, fraud and related claims relating to the loans and
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foreclosures on the Property. The Central Division Action ended
on July 30, 2007, when a dismissal judgment was entered against
Pryor, “grant[ing] the Demurrers [of B Squared] in their entirety,
without leave to amend, as to all six causes of action in
[Pryor’s] Complaint.” The state court awarded B Squared
attorney’s fees in the amount of $743,597.
The Lancaster Action
On December 17, 2009, Pryor filed a complaint in Los Angeles
Superior Court, Lancaster Division, Pryor v. B Squared, Inc., case
no. 021132 (the “Lancaster Action”). As discussed below,
B Squared had been in bankruptcy for nine months when this action
was filed. The complaint in this suit was similar to the one he
filed in the Central Division Action, with the same defendants and
causes of action. However, Pryor filed this action in his own
name (as opposed to the filing of the Central Division Action by
ACRES, his controlled corporation) and he filed it in a different
court division. B Squared alleges that it was never served with
the summons and complaint in the Lancaster Action.
On March 17, 2011, Pryor filed a request for entry of a
default judgment in the Lancaster Action. B Squared then appeared
in the Lancaster Action on September 22, 2011, and moved for
dismissal. Pryor opposed B Squared’s motion to dismiss by the
filing of an Opposition on October 24, 2011. On November 29,
2011, the state court dismissed the Lancaster Action with
prejudice against Pryor.
The April 2010 Action
On April 5, 2010, Pryor filed yet another complaint in Los
Angeles Superior Court, again in the Central Division, Pryor v.
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B Squared, Inc., case no. 435256 (the “April 2010 Action”). The
parties and causes of action were the same as those in the
Lancaster Action, which was still open at the time of filing the
April 2010 Action. The state court dismissed the April 2010
Action on September 20, 2011, for lack of prosecution. B Squared
alleges that it was never served with the summons and complaint in
the April 2010 Action.
The Long Beach Action
As discussed below, the bankruptcy court indicated at a
hearing on December 28, 2011, its intention to permanently enjoin
any action by Pryor to collect on the debt alleged in the
Lancaster Action. Despite this, on January 4, 2012, Pryor filed
yet another action in Los Angeles Superior Court, this time in the
Long Beach Division, alleging the same claims asserted in the
Lancaster Action, and styled as Pryor v. Lyric Ave. P’ship, case
no. NC-57005. Although Pryor did not list B Squared as a
defendant in the caption of this action, the body of the complaint
clearly identifies B Squared as a defendant.
The Bankruptcy Cases
B Squared filed a chapter 11 bankruptcy petition on March 10,
2009. B Squared's Statement of Financial Affairs listed the
judgment in its favor and against ACRES/Pryor entered in the
Central Division Action of $743,597. B Squared’s Statement of
Financial Affairs at 2, ¶ 4. B Squared did not list Pryor or any
of his controlled entities as creditors in its schedules, and
Pryor did not participate in the chapter 11 proceedings.
The bankruptcy court confirmed B Squared’s Second Amended
Plan of Reorganization at a hearing on July 22, 2010. The court
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entered the order confirming the plan on August 20, 2010. In
separate Findings of Fact and Conclusions of Law in Support of
Confirmation of Debtor’s Second Amended Chapter 11 Plan, the court
concluded that all claims arising prior to the date of
confirmation would be discharged pursuant to § 1141(d)(1).
A Discharge Order was entered in the B Squared bankruptcy
case on March 11, 2011. The Discharge Order provided, in relevant
part,
The debtor has no liability for debts discharged under11 U.S.C. . . . 1141 except those debts determined byorder of a court with competent jurisdiction not to bedischarged pursuant to 11 U.S.C. section 523. . . . Allcreditors whose debts are discharged by this order andall creditors whose judgments are declared null and voidby this order are enjoined from instituting orcontinuing any action or employing any process orengaging in any act to collect such debts as personalliabilities of the debtor.
In the meantime, on June 3, 2009, Pryor had filed his own
bankruptcy case under chapter 7. Attached to his Schedule B of
personal property is a “List of Secured and Unsecured Creditors”
in which he lists the Central Division Lawsuit as an action for
fraud, but with no further information or alleged value. The
chapter 7 trustee in Pryor’s case filed a report of no
distribution on December 9, 2011. Pryor was granted a discharge
on December 13, 2011.
The Contempt Order
On November 2, 2011, B Squared filed a Motion for Entry of
Order (1) Enforcing the Discharge Injunction; (2) Permanently
Enjoining Pryor and his Entities from Attempting to Collect the
Discharged Debt; and (3) For Contempt Sanctions (the “Contempt
Motion”). Pryor filed an Opposition to the Contempt Motion on
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6 Recall from the discussion of the Long Beach Action above that — despite the bankruptcy court’s statement on December 28,2011, that it would enter a permanent injunction prohibiting anyactions by Pryor or his entities against B Squared — Pryor filedyet another action on January 3, 2012, Pryor v. Lyric Ave. P'ship,case no. NC-57005 (Los Angeles Superior Court), this time in theLong Beach Division, alleging the same claims asserted in theLancaster Action. B Squared was not named in the caption of thataction, but was clearly identified as the object of the action inthe text of the complaint.
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November 11, 2011.
The bankruptcy court held hearings on the Contempt Motion on
November 29 and December 28, 2011. The transcripts of those
hearings are not in the record or the bankruptcy court’s docket.
However, a copy of the court’s tentative ruling was docketed on
December 28. It reported that Pryor had represented to the court
at the November 29 hearing that he had filed the Lancaster Action
on advice of his counsel, Ms. Katherine Warwick (“Warwick”), who
was representing him in other proceedings. At the November 29
hearing, the bankruptcy court ordered Pryor to provide a
declaration from Warwick to support that assertion. Pryor did not
provide a declaration, but rather submitted a series of redacted
emails between Pryor and Warwick.
The bankruptcy court, at the hearing on December 28,
indicated its intention to grant the Contempt Motion, including a
permanent injunction against any attempt by Pryor to collect on
any debt alleged in the Lancaster Action.6 A January 30, 2012
order entered by the bankruptcy court provided that: (1) Pryor
and related entities were permanently enjoined from any and all
attempts to collect on discharged debts, including any claim
allegedly arising from the Lancaster Action; (2) any claim that
Pryor and related entities may have had against B Squared prior to
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the date of the confirmation of B Squared’s plan of reorganization
was discharged pursuant to § 1141; (3) Pryor and related entities
had knowingly and willingly violated the automatic stay in effect
in B Squared’s bankruptcy case under § 362(a), and knowingly and
willingly violated the discharge injunction under §§ 524 and 1141
after B Squared’s plan was confirmed; (4) B Squared had been
forced to incur substantial expenses in connection with the
Lancaster Action and in prosecuting the motion to stop Pryor’s
continuing violations of the discharge injunction;
(5) compensatory sanctions were awarded against Pryor and in favor
of B Squared in the amount of $25,000, together with punitive
damages in the amount of $10,000.
After the hearing, but before entry of the bankruptcy court’s
order, on January 17, 2012, Pryor filed a motion asking the
bankruptcy court to reconsider the award of sanctions. The court
entered an order denying Pryor’s motion to reconsider sanctions on
January 27, 2012 (the “Contempt Reconsider Order”). In the order
denying the reconsideration motion, the court elaborated on its
finding that, in suing B Squared, Pryor had not acted on advice of
his attorney. The bankruptcy court quoted from one email from
Warwick to Pryor, in which Warwick told Pryor that filing the
Lancaster Action was a violation of the automatic stay: “I
specifically remember saying that it WAS a violation of the
automatic stay. . . . Be perfectly clear however, I told you that
it was a violation of the automatic stay.” Email from Warwick to
Pryor, December 3, 2011, quoted in Contempt Reconsider Order at 4
(capitalization of word “WAS” in original).
In fact, the declaration Warwick had submitted on January 12,
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2012, directly contradicted Pryor’s statements made to the
bankruptcy court on November 29 and December 28 that Warwick had
advised him that he would not violate the automatic stay by
seeking to collect from B Squared because he was not listed on
B Squared’s schedules. Warwick instead declared that: “Because
[Pryor] had not been listed as a creditor in the B Squared
bankruptcy case and because he did not proceed otherwise against
B Squared in the state court litigation, he believed that he had
not violated the automatic stay in this Case.” In short, Pryor
made the representation to Warwick, not vice versa. The
bankruptcy court summarized: “Pryor has twice attempted to get
Warwick to state that she told him to proceed regardless of the
bankruptcy and she has twice refused.” Contempt Reconsider Order
at 4.
Pryor filed a timely appeal of the Contempt Order (BAP No.
CC-12-1059).
The Adversary Proceeding and the Dismissal Order
On December 27, 2011, Pryor filed an adversary proceeding
Complaint to Deny Discharge Pursuant to 11 U.S.C. § 523 and 727
against B Squared in the bankruptcy court. In it, Pryor generally
asserted the same claims that he had alleged against B Squared in
the Central Division and Lancaster Actions, but couched them as
objections to discharge and requests for exception of his claims
from discharge.
Almost immediately, on January 30, 2012, B Squared filed a
motion to dismiss the adversary proceeding pursuant to Civil
Rule 12(b)(6). B Squared argued that the complaint was
time-barred, too conclusory to survive a motion for dismissal
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under Civil Rule 12(b)(6), and barred under the doctrines of
collateral estoppel and res judicata. Pryor responded, repeating
the general allegations made in the Central Division and Lancaster
Actions, emphasizing his allegation that B Squared had engaged in
fraud.
B Squared, through counsel, and Pryor, acting pro se,
appeared at the bankruptcy court hearing concerning the motion to
dismiss on February 28, 2012. A transcript of that hearing is in
the record. The court thereafter entered a Memorandum of Opinion
Re Defendant’s Motion to Dismiss Adversary Proceeding on March 20,
2012. In the Memorandum, the court opined that it would not
consider the arguments of either party, because it had no
authority to grant the relief requested in the Complaint.
First, B Squared had been granted a discharge under § 1141,
and a discharged chapter 11 debtor is not subject to denial of
discharge under § 727.
Second, the bankruptcy court noted that B Squared is a
corporation and, with certain irrelevant exceptions, only
individual debtors are subject to exceptions from discharge under
§ 523(a).
Finally, the bankruptcy court observed that B Squared’s
discharge had been authorized in the Confirmation Order and that,
under § 1144, the court may revoke a confirmation order only if a
motion to revoke is filed within 180 days of the entry of that
order. Even if the Complaint were to be construed as a motion to
revoke, because it was filed on December 27, 2011, or over
400 days after entry of the Confirmation Order, it was
time barred. The bankruptcy court concluded that the 180-day rule
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7 A dismissal with prejudice is a final, appealable orderthat starts the clock on the time to appeal. Elliott v. White Mt.Apache Tribal Ct., 566 F.3d 843, 846 (9th Cir. 2006). Areconsideration motion under Rules 9023 and 9024 (incorporatingCivil Rules 59(e) and 60(b)(6)) will toll the time to appeal onlyif filed within fourteen days of entry of the order. Rule 8002(b)(3) and (4).
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was not equitably tolled, based principally on the multiple
misrepresentations made to the court by Pryor.
The bankruptcy court granted B Squared’s motion to dismiss
and entered an order dismissing the adversary proceeding with
prejudice and without leave to amend on March 20, 2012.
Pryor filed a Motion to Reconsider Dismissal on April 16,
2012, twenty-six days after entry of the Dismissal Order.7
Pryor’s motion to reconsider the Dismissal Order is fifty-seven
pages long but, at bottom, generally complains that the bankruptcy
court had not considered all of the papers he submitted on the
motion to dismiss.
The bankruptcy court denied Pryor’s motion to reconsider the
Dismissal Order without a hearing in an order entered April 20,
2012. In the order, the court noted that the documents that Pryor
asserted had not been considered did not address the basis of the
court’s ruling and therefore made no difference in the outcome of
the motion to dismiss. The court also observed that at the
hearing on February 28, 2012, an issue had been raised as to
whether Pryor had standing to prosecute the adversary proceeding
because the claims he asserted were property of his bankruptcy
estate. Pryor asserted that the claims had been abandoned by the
bankruptcy court the previous week. Counsel for B Squared stated
that she had reviewed the docket of the bankruptcy case and did
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8 The B Squared bankruptcy court was apparently not aware onApril 20, 2012, that the bankruptcy court in Pryor’s bankruptcycase had, on April 17, 2012, denied Pryor’s request to order thetrustee to abandon the claims against B Squared. Hr'g Tr. 6:9-17,April 17, 2012 (THE PRYOR BANKRUPTCY COURT: "Let me stop youbecause it's obvious we're not going to get anywhere as far asB Squared is concerned. I'm going to deny your motion to abandon[the B Squared claims]. I'm not going to do anything to encourageyou in any way to further abuse the bankruptcy system, at least inrelationship to the B Squared action.").
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not find any such order. The bankruptcy court ordered Pryor to
submit proof that they had been abandoned. Pryor never provided
proof that the claims were abandoned. Therefore, the court
concluded that the claims Pryor asserted in his Complaint were
held by the chapter 7 trustee, implicitly holding that Pryor did
not have standing to assert them.8
Pryor filed a timely appeal of the order denying his motion
to reconsider the dismissal order on April 30, 2012. However, as
noted above, because his reconsideration motion did not toll the
time for an appeal of the underlying dismissal order, the
dismissal order is not before us in this appeal.
The Vexatious Litigant Order
B Squared filed a motion to have Pryor deemed a vexatious
litigant on April 26, 2012 (the “Vexatious Litigant Motion”). In
it, B Squared included a chart of eight cases Pryor had filed
which, it alleged, demonstrated that Pryor:
routinely forum shops, has cases dismissed and thenrefiles, files actions after the statute of limitationshas run, when unsuccessful against a party refiles inanother court, files baseless appeals, all while notpaying a dime for any of his filings or towards thehundreds of thousands in attorneys’ fees and sanctionsthat have already been awarded against him.
Pryor filed opposition documents on May 15, 2012, generally
disputing B Squared’s allegations.
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The bankruptcy court heard arguments from B Squared and Pryor
on May 29, 2012. After taking the matters under submission, the
court entered the Vexatious Litigant Order on June 22, 2012. The
Vexatious Litigant Order concluded that Pryor had adequate notice
of, and opportunity to defend against, B Squared’s motion. It
attached a chart listing twelve cases, motions, and events that
“led this Court to conclude that a vexatious litigation order is
necessary and appropriate as to and against the Pryor Parties.”
It noted that Pryor had failed to pay contempt sanctions
previously entered against him in the B Squared bankruptcy,
leading the court to believe that additional monetary sanctions
would be ineffective. Instead, the bankruptcy court enjoined
Pryor from initiating any form of action against B Squared in
regard to the Property without obtaining the court’s prior written
consent.
Pryor filed a reconsideration motion seventeen days after
entry of the Vexatious Litigation Order on July 9, 2012. Pryor’s
motion alleged that the bankruptcy court was not aware that Pryor
had been granted a default judgment in the Long Beach Action
against all defendants except B Squared, and reasoned that this
“mooted” the Vexatious Litigation Order. The court denied the
motion to reconsider the Vexatious Litigation Order in an order
entered on August 1, 2012. The bankruptcy court found the
reconsideration motion simply repeated prior oppositions and
provided no relevant new evidence.
Pryor filed a timely appeal of the order denying
reconsideration of the Vexatious Litigant Order on August 8, 2012.
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JURISDICTION
The bankruptcy court had jurisdiction under 28 U.S.C. §§ 1334
and 157(b)(2)(A), (I), (J) and (L). We have jurisdiction under
28 U.S.C. § 158.
ISSUES
Whether the bankruptcy court abused its discretion in
granting the motion for the Contempt Order.
Whether the bankruptcy court abused its discretion in denying
reconsideration of the Dismissal Order.
Whether the bankruptcy court abused its discretion in denying
reconsideration of the Vexatious Litigant Order.
STANDARDS OF REVIEW
An award or denial of sanctions under § 105(a) is reviewed
for abuse of discretion. Nash v. Clark County Dist. Atty's.
Office (In re Nash), 464 B.R. 874, 878 (9th Cir. BAP 2012).
A trial court’s denial of reconsideration under Civil
Rule 60(b) is reviewed for abuse of discretion. Ahanchian v.
In applying the abuse of discretion standard, we first
"determine de novo whether the [bankruptcy] court identified the
correct legal rule to apply to the relief requested." United
States v. Hinkson, 585 F.3d 1247, 1262 (9th Cir. 2009) (en banc).
If the correct legal rule was applied, we then consider whether
its "application of the correct legal standard was (1) illogical,
(2) implausible, or (3) without support in inferences that may be
drawn from the facts in the record." Id. Only in the event that
one of these three apply are we then able to find that the
bankruptcy court abused its discretion. Id.
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DISCUSSION
I.
The bankruptcy court did not abuse its discretion inawarding monetary sanctions against Pryor for violatingthe automatic stay and discharge injunction.
Although Pryor appeals the Contempt Order, it appears that he
only challenges in this appeal the bankruptcy court’s order that
he pay compensatory and punitive damages. Consequently, we do
not review the bankruptcy court’s decision to permanently enjoin
Pryor from seeking to collect the discharged debt from B Squared.
The bankruptcy court awarded $25,000 in damages to B Squared
as compensation for Pryor’s knowing and willful violation of the
automatic stay and the discharge injunction, and $10,000 in
punitive damages for Pryor’s knowing and willful violation of the
discharge injunction. Since the case law distinguishes between
sanction awards under these two injunctions, we must first review
the differences.
The filing of a bankruptcy petition under chapter 11 of the
Bankruptcy Code creates an automatic stay which prohibits, inter
alia, “the commencement or continuation, including the issuance or
employment of process, of a judicial, administrative, or other
action or proceeding against the debtor that was or could have
been commenced before the commencement of the case under this
title, or to recover a claim against the debtor that arose before
the commencement of the case under this title[.]” § 362(a)(1);
Snavely v. Miller (In re Miller), 397 F.3d 726, 730-31 (9th Cir.
2006) ("The stay of section 362 is extremely broad in scope and
. . . should apply to almost any type of formal or informal action
against the debtor or property of the estate.").
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9 Power of court
(a) The court may issue any order, process, or judgmentthat is necessary or appropriate to carry out theprovisions of this title. No provision of this titleproviding for the raising of an issue by a party ininterest shall be construed to preclude the court from,sua sponte, taking any action or making any
(continued...)
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An automatic stay arose when B Squared filed the chapter 11
bankruptcy petition on March 10, 2009. It is uncontested that the
dispute between Pryor and B Squared regarding the Property arose
during the period 2003-2006. The automatic stay remained in
effect to bar actions against B Squared until entry of the
discharge and discharge injunction on March 11, 2011.
§ 362(c)(2)(C) (“[T]he stay of any other act under subsection (a)
of this section continues until the earliest of — . . . (c) if the
case is a case under . . . chapter . . . 11 . . . of this title,
the time a discharge is granted or denied[.]”); Zilog, Inc. v.
Corning (In re Zilog, Inc.), 450 F.3d, 996, 1009 (9th Cir. 2006).
Consequently, any attempt by Pryor to commence or continue an
action against B Squared to collect on an alleged debt concerning
the Property between March 10, 2009 and March 11, 2011 would
constitute a violation of the automatic stay, and any collection
actions against B Squared taken on or after March 11, 2011 would
constitute a violation of the discharge injunction.
The bankruptcy court imposed sanctions against Pryor for
violating the automatic stay and discharge injunctions based on
his knowing and willful actions in the Lancaster Action. Contempt
Order at ¶¶ 2-4. The court imposed sanctions under the authority
granted by § 105(a)9; Cal. Employment Dev. Dep't v. Taxel
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9(...continued)determination necessary or appropriate to enforce orimplement court orders or rules, or to prevent an abuseof process.
§ 105(a).
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(In re Del Mission Ltd.), 98 F.3d 1147, 1152 (9th Cir. 1996)
(holding that damages for violation of the automatic stay of a
corporate debtor are properly sought under § 105(a)). The
propriety of an award made under § 105(a) turns not on a finding
of bad faith or subjective intent, but rather on a finding of
"willfulness," where willfulness has a particularized meaning:
“[W]illful violation" does not require a specific intentto violate the automatic stay. Rather, the statuteprovides for damages upon a finding that the defendantknew of the automatic stay and that the defendant'sactions which violated the stay were intentional.
Havelock v. Taxel (In re Pace), 67 F.3d 187, 191 (9th Cir. 1995).
Pryor provided inconsistent statements in the record
concerning the date when he first became aware of the B Squared
bankruptcy case and the automatic stay. Pryor conceded in a
declaration submitted in the Lancaster Action on September 28,
2011 that he was aware of the pendency of the B Squared bankruptcy
case by August 3, 2010. But the bankruptcy court had evidence
provided by Pryor himself that he knew of the B Squared bankruptcy
case and existence of the automatic stay before termination of
that stay, and that he nonetheless knowingly and willfully
violated that stay.
At the hearing on the Contempt Motion on November 29, 2011,
Pryor informed the bankruptcy court that when he inquired of his
counsel, Warwick, who represented him in other matters, she
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counseled him that his activities in the Lancaster Action did not
violate the stay. But when Pryor submitted the copies of emails
between himself and Warwick, she stated that: “I specifically
remember saying that [the Lancaster Action] WAS a violation of the
automatic stay. . . . Be perfectly clear however, I told you that
it was a violation of the automatic stay." Email from Warwick to
Pryor, December 3, 2011, quoted in Contempt Reconsider Order at 4.
Indeed, in his reply brief, Pryor cites to his testimony
given on April 25, 2012, before the bankruptcy court in his own
bankruptcy case. As shown by the transcript of that hearing in
the excerpts of record, in a colloquy between Pryor and the Pryor
Bankruptcy Court, the court suggested that Pryor was being evasive
on the question of when he first became aware of the B Squared
bankruptcy. The Pryor Bankruptcy Court then placed Pryor under
oath:
THE PRYOR BANKRUPTCY COURT; You’re under oath. I’masking you directly, did you — when did you first getknowledge of the B Squared bankruptcy? . . .
PRYOR: After December 2009.
THE PRYOR BANKRUPTCY COURT: After — when after?
PRYOR: That was — I think it was in January, rightaround January.
THE PRYOR BANKRUPTCY COURT: Of 2009?
PRYOR: Not in 2009, but the next year.
THE PRYOR BANKRUPTCY COURT: 2010?
PRYOR: Right.
Hr’g Tr. 9:10–10:4, April 27, 2012.
Thus, the record on appeal establishes that Pryor, contrary
to his representation that he did not know of the B Squared
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bankruptcy until August 3, 2010, testified that he was aware of
the bankruptcy filing by January 2010. And contrary to his
initial representation to the bankruptcy court that his counsel
advised him that it would not violate the stay for him to pursue
the Lancaster Action, he subsequently produced emails and a
declaration from counsel where she denies giving him that advice.
In the bankruptcy court’s words, “Pryor has twice attempted to get
Warwick to state that she told him to proceed regardless of the
bankruptcy and she has twice refused.” Contempt Reconsider Order
at 4.
But regardless of the various suspect representations by
Pryor, it cannot be challenged that, at some point during the
pendency of the B Squared bankruptcy case, Pryor became aware of
the automatic stay and failed to remedy his on-going stay
violations. In other words, whether he had knowledge of the stay
in August 2010, January 2010, or earlier, he was under an
obligation to immediately dismiss B Squared from the Lancaster
Action. Knupfer v. Lindblade (In re Dyer), 322 F.3d 1178, 1192
(9th Cir. 2003) (upon discovery of a violation, the creditor “had
an affirmative duty to remedy his automatic stay violation.”).
Even an “arguably innocent” stay violation that the creditor does
not attempt to remedy immediately may constitute a willful stay
violation. In re Zilog, Inc., 450 F.3d at 1007.
Pryor never sought to stop the Lancaster Action, nor to
dismiss B Squared from it, for the seven months after the latest
possible date that he admits he was aware of B Squared’s
bankruptcy, August 2010. And after the automatic stay terminated
with the entry of the discharge injunction, Pryor continued to
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press his claims against B Squared in the Lancaster Action. On
March 17, 2011, Pryor sought entry of a default judgment against
B Squared in the Lancaster Action. Then, after B Squared finally
was made aware of the Lancaster Action and moved to dismiss the
action, Pryor opposed the motion to dismiss B Squared on
October 24, 2011. B Squared would only escape from the Lancaster
Action when the state court dismissed the proceeding with
prejudice against Pryor on November 29, 2011.
Pryor has not challenged in this appeal the calculation of
the amount of the bankruptcy court’s award of $25,000 in
compensatory damages, which the court awarded based on a detailed
fee and expense statement from B Squared. We therefore find that
the bankruptcy court did not abuse its discretion in awarding
compensatory damages to B Squared for expenses incurred in
responding to Pryor’s knowing and willful violation of the
automatic stay and discharge injunction.
The bankruptcy court also awarded $10,000 in punitive damages
against Pryor for his violation of the discharge injunction.
Section 524 of the bankruptcy code provides that a discharge
"operates as an injunction against the commencement or
continuation of an action . . . to collect, recover or offset any
[discharged] debt as a personal liability of the debtor."
§ 524(a)(2). A party who knowingly violates the discharge
injunction can be held in contempt under § 105(a) of the
Bankruptcy Code. Walls v. Wells Fargo Bank, N.A., 276 F.3d 502,
507 (9th Cir. 2002) (holding that civil contempt is an appropriate
remedy for a willful violation of § 524's discharge injunction).
Although the bankruptcy court may not award punitive damages for
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violation of the automatic stay under § 105(a), it may award
punitive damages under that section for knowing and willful
violations of the discharge injunction. Espinosa v. United
cases in which the discharge injunction was violated willfully,
courts have awarded debtors actual damages, punitive damages and
attorney's fees.’)”). The standard in this circuit for violations
of the discharge injunction is that the movant must prove that the
creditor: (1) knew the discharge injunction was applicable and
(2) intended the actions which violated the injunction. Renwick
v. Bennett (In re Bennett), 298 F.3d 1059, 1069 (9th Cir. 2002)
(citing Hardy v. United States (In re Hardy), 97 F.3d 1384, 1390
(11th Cir. 1996)).
Although a bankruptcy court can infer that a creditor has
knowledge of a discharge injunction from the creditor’s knowledge
of the bankruptcy case, such an inference must be proven.
In re Zilog, Inc., 450 F.3d at 1003. The bankruptcy court
conducted hearings on the contempt motion on November 29 and
December 28, 2011. The court considered the declarations from the
parties regarding the discharge injunction. In particular, in his
declaration, Pryor states,
B Squared counsel makes the claim whether I proceededagainst B Squared Inc. after they were discharged. Thisis apparently “Yes.” After Warwick had checked PACERand advised me that I was not listed as a creditor, Iwas under the assumption that this debt was not
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discharged. It is clear that I was not acting withoutthe advice of an experience[d] Bankruptcy Attorney. Iwas under the assumption that B Squared debt concerningDan Pryor and his entities were never discharged. Iwould never [have] violated an automat[ic] stay of thiscourt or any court knowing that the claims weredischarged.
Declaration of Dan Pryor at 4, December 23, 2011. Pryor thus
concedes that he knew that there had been a discharge entered in
B Squared’s bankruptcy case, but he disputes the consequences of
that discharge.
There was conflicting evidence whether Pryor knew of the
existence and effect of the discharge injunction when it was
entered on March 11, 2011. But the evidence is uncontested that
Pryor was made aware of the injunction and consequences for
violating it on September 19, 2011, when B Squared sent Pryor an
email stating:
Please further note that [this] email shall serve asnotice that, continuing to prosecute [the LancasterAction] is a clear violation of the automatic stay anddischarge injunction and if we are forced to do so, [we]will file a motion in the Bankruptcy Court topermanently enjoin you from attempting to collect on analleged pre-petition obligation of [] B Squared, andwill seek monetary sanctions and attorney’s costsagainst you for your blatant disregard of the dischargeinjunction.
B Square email to Pryor, September 19, 2011, attached to and
incorporated as exh. G to the Supplemental Declaration of Simon
Aron in support of the Contempt Motion, December 20, 2011.
As mentioned earlier, the record does not include a
transcript of the December 28, 2011 hearing where the bankruptcy
court reported its reasons for awarding sanctions for violation of
the automatic stay and discharge injunction. However, in its
Contempt Reconsider Order, the court reported its credibility
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10 A copy of the state court docket in the Lancaster Actionwas attached to and incorporated in the Declaration of ElsaHorowitz, attorney for B Squared, submitted in support ofB Squared’s Vexatious Litigant Motion. Bankr. 09-12590 at dkt.no. 597. The Vexatious Litigant Order acknowledged review of alldeclarations submitted related to the Vexatious Litigant Motion.
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ruling at the December 28, 2011 hearing: “Further, as I stated at
the December 28 hearing, I simply do not believe Pryor as to his
belief on the effect of the discharge.” Contempt Reconsider Order
at 5. In this appeal, Pryor acknowledges that the court used
those same words at the December 28 hearing. Pryor Reply Br. at
28.
Additionally, there is a copy of the state court docket of
the Lancaster Action in the excerpts of record.10 The docket
entries include: (1) 9/12/2011, Pryor files Notice of Hearing on
OSC why a default judgment should not be entered against B Square;
(2) 9/22/2011, B Squared files declaration of Simon Aron opposing
entry of default judgment against B Squared; (3) 9/29/2011, Pryor
files Declaration in response to declaration of Aron;
(4) 10/19/2011, B Squared files Motion to Dismiss action against
B Squared; (5) 10/24/2011, Pryor files Request for Entry of
Default against B Squared; (6) 10/24/2011, Pryor files Opposition
to Motion to Dismiss of B Squared; (7) 11/29/2011, “JUDGMENT OF
DISMISSAL WITH PREJUDICE OF THE ACTION IN ITS ENTIRETY IS ENTERED
IN FAVOR OF B SQUARED.”
In sum, the record on appeal amply demonstrates that Pryor
knowingly and willfully continued to prosecute the Lancaster
Action after Pryor had notice of the discharge injunction and the
consequences of violating it. Pryor has not challenged in this
appeal the amount of punitive damages awarded against him to
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B Squared. Therefore, we also conclude that the bankruptcy court
did not abuse its discretion in awarding $10,000 in punitive
damages for Pryor’s knowing and willful violation of the discharge
injunction.
II.
The bankruptcy court did not abuse its discretion indenying Pryor’s motions for reconsideration of theDismissal Order and the Vexatious Litigant Order.
As pointed out above, Pryor did not timely appeal the
Dismissal Order or the Vexatious Litigant Order. However, the
bulk of Pryor’s arguments in these two appeals challenge the
merits of the bankruptcy court’s decision to grant the underlying
orders. We may not review those orders in this appeal because we
do not have jurisdiction to hear them. Samson v. W. Capital
Partners, LLC (In re Blixseth), 684 F.3d 865, 870 (9th Cir. 2012)
(“A reviewing court lacks jurisdiction over an appeal that is not
timely filed. The requirement of a timely notice of appeal is
mandatory and jurisdictional.”).
Pryor’s briefs are also unclear under which provisions of the
Rules he sought reconsideration of these orders. His
reconsideration motions in the bankruptcy court sought review of
both orders under Civil Rules 59(e) and 60(b)(6), as incorporated
by Rules 9023 and 9024. But Civil Rule 59(e) was not available to
him because such a motion must be filed within fourteen days of
entry of the order sought to be reconsidered.
Moreover, Civil Rule 60(b)(6) imposes a very high threshold
of proof. Its “catch-all” provisions are available rarely, are
solely an equitable remedy to prevent manifest injustice, and
should be invoked only where extraordinary circumstances prevented
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a party from taking timely action to correct an erroneous
judgment. United States v. Washington, 394 F.3d 1152, 1157 (9th
Cir 2005). As such, under Civil Rule 60(b)(6), a party seeking
relief must demonstrate both injury and circumstances beyond his
control that prevented him from proceeding with the prosecution or
defense of the action in a proper fashion. Id.
In both reconsideration appeals, Pryor argues that the
bankruptcy court’s failure to review documents that he admittedly
submitted at the last minute or were somehow “lost in the mail”
prevented him from receiving a fair consideration of his position.
But Pryor asserts that the documents he submitted in seeking
review of the Dismissal Order were “lost in the mail” and he only
submitted the documents in seeking review of the Vexatious
Litigant Order the day before the hearing on reconsideration. In
other words, he provided no acceptable explanation for his failure
to provide the documents in sufficient time for the court to
consider them.
In its order denying reconsideration of the Dismissal Order,
the bankruptcy court in fact observed that it had reviewed the
allegedly “lost” documents and found that they “do not go to the
basis of the ruling and make no difference in the outcome of the
motion.” Order Denying Motion to Reconsider Dismissal at 4,
April 20, 2012. Thus, Pryor cannot argue here on appeal that he
was prejudiced because the bankruptcy court did not examine the
documents. The court did examine them and rejected his arguments.
Based on our review of the record, we see no abuse of discretion
in the court’s procedure.
As to the Vexatious Litigant Order, Pryor argues that the
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bankruptcy court failed to consider papers he submitted the day
before the hearing, showing that he had submitted in the state
court a Motion to Consolidate the Lancaster Action with the Long
Beach Action. On reconsideration, the bankruptcy court did in
fact review those papers and ruled that “the request is
repetitious of prior oppositions and provides no relevant new
evidence.” Order Denying Reconsideration of Vexatious Litigant
Order at 2, August 1, 2012.
In other words, in both appeals of reconsideration of the
Dismissal Order and the Vexatious Litigant Order, Pryor did not
demonstrate “circumstances beyond his control that prevented him
from proceeding with the prosecution or defense of the action in a
proper fashion.” In one case, he submitted the documents only the
day before they were due; in the other they were allegedly “lost
in the mail.” But in either case, on reconsideration the court in
fact reviewed the documents and thus he was not prevented from
proceeding with their prosecution. Thus, he cannot satisfy the
elements needed for extraordinary relief under Civil
Rule 60(b)(6).
Despite his extensive court experience, we recognize that
Pryor is a pro se litigant and not an attorney. We also
acknowledge our responsibility to treat his pleadings liberally.
King v. Atiyeh, 814 F.2d 565, 567 (9th Cir. 1987). Fairly
considering Pryor’s position leads us to conclude that the most
appropriate statute to support his request for relief from the
Vexatious Litigant Order and Dismissal Order was Civil
Rule 60(b)(2) (“newly discovered evidence that, with reasonable
diligence, could not have been discovered in time to move for a
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new trial under Rule 59(b)”). To obtain relief under Civil
Rule 60(b)(2), the creditor must show that the “new evidence”:
(1) existed at the time of the trial; (2) could not have been
discovered through due diligence; and (3) was “of such magnitude
that production of it earlier would have been likely to change the
disposition of the case.” Jones v. Aero/Chem Corp., 921 F.2d 875,
878 (9th Cir. 1990).
In Pryor’s motion to reconsider the Dismissal Order,
according to the bankruptcy court, he attached “the schedules of
the debtor and the mailing matrix, the unpublished BAP opinion in
Pryor v. ITEC Financial [BAP No. CC-10-1258], various documents
from Acres Commodities Real Estate Securities v. B Squared Inc.
[LASC BC 353526], fictitious business name statements for Acres
Development and Maintenance Unlimited and Pryor’s Declaration
dated February 27, 2007.” The court also noted that Pryor failed
to present documentation of his bankruptcy court’s alleged
abandonment of Pryor’s claims against B Squared. The court
summarized its ruling on the documents:
The documents presented in this motion forreconsideration (which Pryor seems to assert were lostin the mail and not reviewed by the court prior toissuance of the memorandum of opinion) do not go to thebasis of the ruling and make no difference in theoutcome of the motion. The ruling was not made withoutfull review of the filings and it was delayed some weeksafter oral argument. In fact, Pryor was ordered tosubmit information proving that the abandonment hadtaken place, which he did not do and which is notattached to this motion because it does not exist.
Order Denying Reconsideration of Dismissal Order at 4. In other
words, the documents Pryor wanted the bankruptcy court to consider
were not new evidence, persuasive, or even relevant. The
bankruptcy court did not abuse its discretion in denying
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reconsideration of the Dismissal Order.
In Pryor’s motion to reconsider the Vexatious Litigant Order,
he asserted, “I filed papers, addressing all the above issues.
However, the Court did not receive the papers and have an
opportunity to review such papers before the next hearing. For
that reason we feel that the court did not have all the fact[s]
based on the statement in the ruling and before the final decision
was made.” On its face, this assertion fails to meet criterion 2
of Jones, that the information submitted could not have been
discovered through due diligence.
The bankruptcy court summarized its view of Pryor’s motion
succinctly: “The motion to vacate the vexatious litigant order is
hereby denied. The request is repetitious of prior oppositions
and provides no relevant new evidence. The Court has considered
all matters put before it and finds no reason to vacate or modify
the prior order.” Order Denying Reconsideration of Vexatious
Litigant Order at 2. The bankruptcy court applied the correct law
and its application was not illogical, implausible, or without
support in inferences that may be drawn from the facts in the
record.
The bankruptcy court did not abuse its discretion in denying
reconsideration of the Dismissal Order or the Vexatious Litigant
Order.
CONCLUSION
We AFFIRM all three orders of the bankruptcy court.
